CONSUMER LEGAL ADVISORS

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1 CONSUMER LEGAL ADVISORS A CONSUMER PROTECTION LAW FIRM PROTECTING AMERICA S CONSUMERS ONE CONTRACT AT A TIME 1

2 IMPORTANT CONTACT INFORMATION We are here for you! Contact us with ANY questions, comments or with any information you have to share. TOLL FREE: (Monday-Friday, 9am to 5pm EST) FAX: WEB: MAIL: Consumer Legal Advisors C/O Palm Beach Paralegal 1615 S. Congress Ave Suite 103 Delray Beach, FL THE FIRM Consumer Legal Advisors protects consumers from predatory lending practices, unlawful billing practices, unlawful collection practices and unlawful credit reporting practices. The firm specializes in contract law in as much as it relates to the common law, the Truth in Lending Act, Fair Credit Billing Act, Fair Debt Collection Practices Act, Fair Credit Reporting Act and Equal Credit Opportunity Act. Our attorneys have a minimum of 9 years experience in defending and prosecuting claims against banks, debt collectors, debt purchasers and credit reporting agencies. 2

3 PAYDAY LOAN FACTS Payday loans are considered as short-term loans that you can use to support you during rough times especially concerning with monetary problems. There are a lot who wanted to be in the know about payday loans. Before using payday loans, one must know the attached costs and consequences to avoid losing much. In this topic, you can have a quick overview on how payday loans works. Additional facts and info about the correct usage and safe business deals will also be tackled. Definition of Payday Loans Payday loans are loans that are acquired if a person is in dire need of money. One can have the opportunity to have a payday loan but only in a small amount. Payday loans can help you through when you re temporarily out of cash. The time frame a payday loan lasts is not less than two weeks, at least. That is only applicable if a person requested for just a modest amount of money like a couple of bucks. To be able to request for a payday loan, the person typically writes a check stating the amount to be borrowed which also includes a fee. Usually, the one who is requesting leaves the check to the lender. But what if you can t repay it at the right time? You can keep it rolling for the loan to be extended. You don t have to repay it at once, although you may find it surprising if your fees keep on accumulating. Payday Loans Costs Generally, payday loans are quite expensive, people who go into this pay annual percentage rate or APR that amounts to an overwhelming percentage. Example, if you have borrowed $200 to be paid for two weeks, you can pay a fee of $40. And if you can t pay the borrowed amount and the fee on time, you may find it very disturbing to pay more increasingly. This kind of percentage can be quite alarming especially for those who can only pay so much. Pitfalls of Payday Loans One of the main pitfalls of payday loans is that the company doesn t really help you solve your problem regarding financial problems. They only make the problem at hand even worse because of the high percentage they are imposing on their clients. Regardless of what your problem is, the loaning company doesn t really care for as long you pay the amount and fee adjoined with it. Because of the percentage fee that is connected to the amount to be borrowed instead of helping you up, it just pulls you down. Although, in times of crisis, payday loans can be very helpful, people consider it above every risk that is stated. Sometimes payday loans make sense most especially if the person borrowing money needs it so much. This would only apply for short-term payday loans. There is a total difference with long-term payday loans. Trouble may arise if things are already out-of-hand. If the checks that you have written for loaning establishments bounced, this will appear on your credibility. Result? Fewer banks will be thrilled to work with you. Payday Loan Alternatives There are tons of alternatives in exchange of payday loans. These are some: Having your own emergency fund that will be kept in your savings account but this one s easier said than done. Open a credit for emergency purposes Get a part time job (but this will take some time and will not be very useful when on-the-spot emergency arises) 3

4 Tactics to Evade State Small Loan and Usury Laws Some lenders use sham transactions, such as Internet access with a rebate schemes, to cloak loans. For example, In Texas, most lenders operate as unregulated "credit services organizations" to evade state small loan limits set by the Texas Finance Commission under the small loan law. The Federal Deposit Insurance Corporation took enforcement action to stop a dozen or so small banks from "renting" their charters to help payday lenders operate in states that do not authorize these loans or interest rates. Payday lenders revamped their single payment loans into high cost installment loans to evade state law restrictions in Illinois and New Mexico. In Virginia, some lenders morphed payday loans into open end lines of credit to escape rate caps. They use offshore companies, Indian tribes and reservations, shell companies and numerous other methods to operate in the underworld. Debt Traps Payday loans trap consumers in repeat borrowing cycles due to the extreme high cost to borrow, the very short repayment term, and the consequences of failing to make good on the check used to secure the loan. Consumers have an average of eight to thirteen loans per year at a single lender. In one state almost sixty percent of all loans made are either same day renewals or new loans taken out immediately after paying off the prior loan. One of the main drawbacks of payday loans is the loan company really doesn't solve the problem at hand even worse because of the high percentage rates they are commanding from their borrowers. The loan company does not care what your particular problem is, as long as you pay back the amount you borrowed along with the fee they charge. Since the fee they charge to borrow the money is so high, instead of actually helping you out, it only takes you further in debt. The number of payday loan, check cashing and pawn shop are more than double the number of McDonald's locations in the US. Payday loan stores sell $40 billion each year in expensive small dollar loans that carry fees 30 times that of the average credit card. Millions of lower and middle income Americans spend over $8 billion per year on payday loan fees alone. 4

5 FREQUENTY ASKED QUESTIONS (FAQs) Q: What can I expect during this time? A: You can expect Consumer Legal Advisors to be diligently determining the status of all of your payday loans that you have enrolled in our program. You can also expect us to be available to answer any questions you might have during this process. You should expect a few calls from your payday lenders, especially after you regain control of your bank account. Q: Will the payday loan companies continue to call me? A: Potentially. You will receive calls from the payday loan companies if you are no longer paying them. We will be sending each of your creditors a cease and desist letter as soon as you are enrolled in the program and creditor contact information is established. This request will inform your creditors that you have retained Consumer Legal Advisors to assist you and direct them to call us instead of you. However, no guarantees can be made that all creditors will cease calling you. Once our communication with the payday lenders begins, you should see a drop in the number of calls they make directly to you. Direct all calls to us and hang up on them! Q: What if these companies don t want to call KCG or tell me they don t work with third parties? A: It is very common for the payday loan creditors to tell you they do not work with us and don t have to call us. Resistance to working with Consumer Legal Advisors in the beginning of the program is almost a given. Remember, your creditors are now receiving notice that you have retained and attorney and are requesting that the debt be validated. They most likely want to discourage you from using a program like this because they are more likely to get more money out of you by harassing you than working with us. If they don t call us, we will be calling them as soon as we send out the power of attorney and cease and desist letters. Q: Are there any guarantees? A: KCG cannot guarantee any particular outcome in our program. Each creditor can, and often times do, behave different than the next. We can, however, guarantee that we will use our best efforts and experience to obtain the maximum success we can get on your payday loan situation and act ethically at all times. We will remain in constant contact with you throughout the program and always keep your best interests at the forefront of our efforts. 5

6 FAIR DEBT COLLECTIONS PRACTICES (FDCPA) INFORMATION The Fair Debt Collection Practices Act, commonly referred to as the FDCPA, is a federal law designed to protect all consumers against certain debt collection practices. It prohibits debt collectors from using dishonest and abusive methods of collecting monies owed by you. If you communicate to any debt collector, in writing, that you wish the collector cease any further collection tactics, the collector is required by law to honor that request. This only applies to third party collection agencies, not the original bank that issued the account. You also have the right to dispute the validity and the amount of any debt upon the first contact that you receive by a debt collector. Each such debt collector has five days to send you a letter stating you have thirty days (referred to as a 30-day letter) to dispute the validity or amount of the debt. If, within 30-days, you send a letter to the debt collector disputing the validity or amount of the debt, the debt collector must cease all further collection activities until you have been provided with the proof of the validity or amount of the debt. The following actions may be illegal practices that Debt Collectors sometimes engage in: A debt collector fails to honor your request to cease communication with you. A debt collector calls your place of employment after you have given verbal and written notice not to call you at work. A debt collector calls before 8:00am or after 9:00pm in your time zone. A debt collector makes an excessive number of phone calls (more than 1 call per day). A debt collector falsely claims to be an attorney or sends you letters that look like they are a law firm. A debt collector continues to contact you even after it has been advised that you are being represented by a financial assistance company. A debt collector tells someone other than you, your spouse or you attorney that you owe its client money. A debt collector misrepresents the amount of money owed, or the legal status of the debt. A debt collector gives false information regarding your credit. A debt collector threatens to garnish your wages or take your personal property. (This can only be done with a court order.) A debt collector threatens you, or your family. A debt collector threatens you with criminal prosecution or implies that you are committing a crime and could be arrested. This includes proof of payment and letters sent to debt collectors. Any correspondence sent to you, including envelopes containing the postmark Communication with debt collectors should always be done in writing. Debt collectors prefer oral communication because it works to their advantage. Written communication works to your advantage because you have a record everything the collector says to you. Also, the debt collector is less likely to intimidate you or use deceptive tactics if it is forced to puts its message in writing. If a debt collector calls you, simply ask it to send whatever it may have to say in writing. Do not engage in conversation with any collector. There is no law requiring you to communicate with the debt collector on the telephone. Be sure to keep a call log (included in your welcome kit) of the following: date/time of the call, the account number and the name and phone number of the debt collector that calls you. Excessive calls or other harassment is a violation of the FDCPA. If you receive mail from a collector regarding a debt that requests you call the collector s office immediately, do not call. You should only communicate with a debt collector in writing. You are not required to give your telephone number to a debt collector. Do not give any information to the debt collector unless it is solid proof that you do not owe the debt. Do not ever send originals; send copies only. Very important save copies of everything! This includes proof of payment and letters sent to debt collectors. Any correspondence sent to you, including envelopes containing the postmark, name and return address information of the debt collector, 6

7 should be retained by you. These materials will be useful to determine whether any violation of the law has occurred. It is always best to send any communication to a debt collector by certified mail, return receipt requested. One of the most important events to occur in respect of each account in your program is when the account is transferred by your original creditor to a collection agency. This usually happens approximately 45 to 60 days after you stop paying that creditor. The law requires a collection agency to send an explanation of your right to dispute a debt within (10) days after the first contact by that collector. This letter is commonly referred to as the 30-day letter. Once you receive a 30-day letter, you must fax it immediately to Payday Support Center at (888) We will prepare an appropriate responsive letter on your behalf requesting, among other things, written validation of your debt, and a copy to you and the original creditor. Once the debt collector receives your request for verification of the debt, the debt collector cannot take steps to collect on the debt until it provides verification of the debt in writing to you. If the collector attempts to contact you before providing such verification, it is a violation of the FDCPA. Important Notice It is vital to the success of this program that you do not take any actions with creditors or collection agencies without coordination with Consumer Legal Advisors. If you ever have any questions concerning how to deal with creditors or collectors, please contact Consumer Legal Advisors at Attention Clients If you are ever contacted by a Debt Collector: Never give your banking or credit card information. Never do check by phone as debt collectors could empty your bank account without your consent. Never send debt collectors money by Western Union. Remember: If it is not in writing, it is not a deal. It is the job of the debt collector to collect monies owed by using any means possible. Note: Paying a debt collector will not get negative information removed from your credit report. Collectors do NOT have that authority. 7

8 CREDITOR CALL LOG FORM On the lines below, write down every time a creditor or debt collector calls you. You can log up to five collection calls on this one page. Make copies as needed. Please fill in the information as thoroughly and accurately as possible, and if you have any questions regarding this form, do not hesitate to call us at (855) This form can be ed to agray@consumerlegaladvisors.com or faxed to (888) Name: Client ID #: NAME OF COMPANY: TIME OF CALL: Date: CALLER S NAME: PLACE OF CALL: Caller ID #: NOTES / COMMENTS: (Please Describe Telephone Conversation, Especially Any Harassment By Caller) NAME OF COMPANY: TIME OF CALL: Date: CALLER S NAME: PLACE OF CALL: Caller ID #: NOTES / COMMENTS: (Please Describe Telephone Conversation, Especially Any Harassment By Caller) NAME OF COMPANY: TIME OF CALL: Date: CALLER S NAME: PLACE OF CALL: Caller ID #: NOTES / COMMENTS: (Please Describe Telephone Conversation, Especially Any Harassment By Caller) NAME OF COMPANY: TIME OF CALL: Date: CALLER S NAME: PLACE OF CALL: Caller ID #: NOTES / COMMENTS: (Please Describe Telephone Conversation, Especially Any Harassment By Caller) NAME OF COMPANY: TIME OF CALL: Date: CALLER S NAME: PLACE OF CALL: Caller ID #: NOTES / COMMENTS: (Please Describe Telephone Conversation, Especially Any Harassment By Caller) 8